This measure calculates the number of full-time equivalent employees (FTEs) per $1 billion purchases employed to select suppliers (typically through a request for information [RFI], request for proposal [RFP], or request for quote [RFQ] process) to create business value, reduce cost, and ensure quality. It is part of a set of Process Efficiency measures that help companies optimize the performance of their "select suppliers and develop/maintain contracts" process by minimizing waste and refining resource consumption.
(Number of FTEs who perform the process group "procure materials and services" * Percentage of process group "procure materials and services" FTEs who perform the process "select suppliers and develop/maintain contracts" * .01) / (Value of all materials and services purchased * .000000001)
FTE - (full-time equivalent employee)
To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.
For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:
20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting
20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting
Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.
The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.